Bloomberg News

U.S. Auto Sales Surge to Highest Levels Since Recession: Cars

February 08, 2012

Feb. 2 (Bloomberg) -- Automakers sold new cars and trucks in January at the fastest pace since the 2009 “cash for clunkers” program without resorting to profit-sapping discounts, signaling demand returned to pre-recession levels.

U.S. light-vehicle sales accelerated to a 14.2 million seasonally adjusted annualized rate in January, the highest since the August 2009 government trade-in program. Honda Motor Co. reported its first increase since its inventory plunged after Japan’s tsunami in March that interrupted the auto market’s recovery last year.

General Motors Co. remained the sales leader even as its market share dropped by 3.4 percentage points, followed by Ford Motor Co. and Toyota Motor Corp. While GM was the only major automaker to report a sales decline, investors rewarded the company for pulling back on discounts to lift profit margins, boosting the stock 1.5 percent.

“We’re on the road to a real recovery,” said Jeff Schuster, senior vice president for forecasting at LMC Automotive in Troy, Michigan. January sales showed “a strength that we haven’t seen since well before cash for clunkers, back into mid-2008 before things started going downhill. That’s a long time.”

The light-vehicle sales rate exceeded the 13.4 million pace that was the average estimate of 14 analysts in a Bloomberg survey. Aside from August 2009, the U.S. monthly sales rate last topped 14 million in May 2008, according to Autodata Corp.

Incentives Drop

Automakers lowered spending on incentives by 5.6 percent, or about $144 per vehicle sold, to $2,435 in January, Woodcliff Lake, New Jersey-based Autodata said yesterday.

With the average age of cars and trucks rising to a record 10.8 years, analysts see pent-up demand boosting U.S. sales to a third-straight annual gain in 2012, the longest streak since sales peaked in 2000. An improving job market and available credit may propel an increase of more than 6 percent to 13.6 million vehicle sales, the average of 18 analysts’ estimates.

Honda sales climbed 8.8 percent, topping six analysts’ average estimate for a 1.2 percent decline. Deliveries were buoyed by a 50 percent increase in sales of Civic compacts. The Tokyo-based automaker lost 1.6 percentage points of market share last year as sales fell in each of the last eight months.

GM said deliveries fell 6.1 percent, beating the 7.3 percent decline estimated by eight analysts. The Detroit-based automaker, the world’s largest, was helped by sales of the Chevrolet Sonic subcompact that it introduced late last year and the new Chevrolet Malibu that started production last month.

GM’s Prices

Buyers paid about $30,400 per GM vehicle in January, up about $1,000 from a year earlier, Jim Cain, a company spokesman, said in an e-mail. GM’s incentive spending fell 16 percent, or $592, to $3,071 per vehicle according to Autodata. In January 2011, the automaker outspent the industry average by 42 percent. Last month, that gap was trimmed to 26 percent.

“As the vehicles have become more desirable, the need for rebates is waning,” Gordon Stewart, who owns four Chevrolet dealership and one Toyota outlet in four states, said yesterday in a phone interview. “You just see rebates on very select models and not the newest stuff.”

GM rose 1.5 percent to $24.37 at the close of New York trading yesterday. Ford, which increased sales and lost market share, fell 0.7 percent to $12.33.

“GM laying off incentives looks like a positive to the markets,” Kevin Tynan, senior automotive analyst for Bloomberg Industries, said in an e-mail. “Better to stand firm on prices and let demand fall where it will for now.”

Chrysler Gains

Chrysler Group LLC vaulted over Nissan Motor Co. and Tokyo- based Honda, which were ahead in sales a year earlier, by reporting a 42 percent increase in car and truck deliveries that led the industry. Sales of the 200 sedan, its top-selling car last year, surged to 7,007 from 788. That pushed Chrysler-brand sales to an 81 percent increase. Ram pickup deliveries rose 47 percent to 17,909.

Chrysler, majority owned by Fiat SpA, said yesterday that it earned $225 million in net income in the fourth quarter, exceeding the $186 million average of four analysts’ estimates. Profit may rise to about $1.5 billion in 2012 as global revenue climbs 18 percent to $65 billion, the Auburn Hills, Michigan- based company said.

“We’re looking at 2012 with some degree of optimism,” Sergio Marchionne, chief executive officer of Chrysler and Fiat, said yesterday on a conference call. The company forecasts U.S. sales will rise to 13.8 million this year and that it will gain about 1 percentage point of market share, said Richard Palmer, the company’s chief financial officer.

Camry Rebounds

Toyota sales rose 7.5 percent last month to 124,540 cars and light trucks. Asia’s largest automaker exceeded the average of six analysts’ estimates for a 7 percent increase. The gain was led by a 56 percent jump in sales of Camry model.

Nissan’s January sales rose 10 percent to 79,313 cars and trucks, topping the 7.6 percent average estimate of six analysts. Deliveries were led by a 36 percent increase in deliveries of Altima, its best-selling model. The automaker expects to increase sales at least 10 percent this year, Brian Carolin, its U.S. sales chief, said in a Jan. 9 interview.

Volkswagen AG, which is targeting U.S. sales growth of more than 10 percent this year, increased combined U.S. sales of its Volkswagen and Audi brands by 39 percent last month from a year earlier. The average of three analysts’ estimates was for a 27 percent gain.

Volkswagen plans to sell more than 500,000 cars in the U.S. this year as part of the Wolfsburg, Germany-based automaker’s goal to become the world’s biggest automaker by 2018.

“Momentum continues to build,” LMC’s Schuster said. “The overall feeling of the industry is certainly that we’re much closer to what normal is.”

--With assistance from Alan Ohnsman in Los Angeles and Libby Sallaberry and Andrew Cinko in New York. Editors: Jamie Butters, Young-Sam Cho.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan at ctrudell1@bloomberg.net; Keith Naughton in Southfield, Michigan, at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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